Spanish finance minister frets Endesa takeover fight is dragging on

JonathanHouse

BRUSSELS (MarketWatch) -- Spanish Finance Minister Pedro Solbes Tuesday said his government was "worried" that the takeover battle for Spanish electricity company Endesa SA
ELE, -1.59%
was dragging on.

"Drawing out these processes is not good," for shareholders and customers of Spain's largest electricity company, said Solbes, speaking at the monthly meeting of European Union finance ministers.

Spain's Gas Natural SDG SA (GAS.MC) launched the first bid for Endesa in September, 2005, and then Germany's E.ON AG
EON, +1.19%
launched a counterbid. Gas Natural has since withdrawn from the process, but Italy's Enel SpA
EN, +60.80%
and Spanish construction company Acciona SA (ANA.MC) Monday said they had agreed on presenting a joint bid for the company.

In addition to the entry of new bidders, Solbes said the bidding has been drawn out by the use of unconventional bid structures, such as the joint bid which Acciona and Enel intend to make, and Gas Natural's agreement with electricity company Iberdrola SA (IBE.MC) to sell it Endesa assets in the event of a successful takeover.

"These are not straightforward bids and they have been challenged legally... it is up for the courts to resolve these matters," Solbes said.

Turning to the Spanish housing market, Solbes dismissed concerns that Spain could suffer fallout from lending to borrowers with poor credit ratings as in the U.S., where numerous lenders in this segment are experiencing extreme financial difficulties.

Spanish house prices have shown the fastest rate of increase in the euro zone in recent years and household indebtedness has rapidly increased to higher-than-average levels for the region.

"We don't have a sub-prime market," Solbes said, saying that virtually all mortgage lending in Spain is done by banks, unlike in the U.S. where specialized lenders have sprung up to go after the so-called sub-prime customers with poor credit.

Solbes also sought to allay concerns that recent falls in world stock markets could reflect fundamental economic problems. He said that E.U. finance ministers at their Brussels meetings Monday and Tuesday had agreed recent market volatility was "absolutely temporary," and that the euro-zone economy should continue to show healthy growth in 2007.

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